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HR and Payroll – To integrate or not to integrate that is the question

Category: Blog Features HR Implementation

I recently had a conversation with an ex-colleague who works in Payroll and it was so interesting to hear her stance on HR & Payroll integration and so of course I had to put pen to paper and share this with you.

There are, of course, several options available to businesses: Is it better to buy an integrated HR and payroll system, or use different systems? Or, use different systems, but integrate the two?

Think about your business set-up and goals. Are you currently using disparate systems which simply don’t talk to each other? Is this causing frustrations due to duplication and error and excessive time spent on admin?

HR and Finance are ‘two separate’ business functions, however there’s no getting away from the fact that Payroll is entirely interdependent. There’s often much conflict around where Payroll should actually reside because employee information held in an HR system is the same information held within the Payroll system and vice versa; names, addresses, contract type, salary, benefits, time and attendance…..the list goes on….

Let me give you an example to put this into context….. some companies may have say, five different pension schemes, all of which could be run as salary sacrifice if desired. If the method were to be swapped, a new contract of employment would be needed and so the payroll department would have to notify HR of this change. We are only mere mortals with the capacity to forget, and in a company of substantial size there is huge risk and huge pressure on the employees processing these types of transactions.

Also, think of the time it takes both parties to input the same data, check the data etc. Duplicated effort is frustrating and the time spent on such admin could be better used on strategic projects to help drive business improvements. As you can see, substantial efficiencies can be realised in terms of both time and money.

Purchasing an integrated HR and Payroll solution can be a dilemma for many companies; it’s a high-value item and there’s huge pressure on businesses to cut spending.  Their concerns tend to centre around factors such as existing system performance, the size and geographic distribution of the workforce, reporting capabilities and the of course the organisation´s information technology platform and strategy.

A company may already have a commitment to an existing payroll solution, such as SAP. Or, some businesses may simply be reluctant to change and hold the view that their current systems and processes are working perfectly fine and therefore what isn’t broken doesn’t need to be fixed.

However, there’s no doubt for us that our answer to the initial question is: ‘integrate’. There are too many positives to ignore and what business doesn’t want to save both time and money to ultimately grow their business….?

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